Indonesia Update: 15th Economic Policy Package Soon Released says Coordinating Minister

INDONESIA UPDATE | February 6, 2017
Authors: Kim Yaeger, Artha Sirait and Ian Saccomanno
 
 
THE COUNCIL'S TAKE
 
 

Coordinating Minister Darmin Nasution: 15th Economic Policy Package Soon to be Released

Coordinating Minister of Economic Affairs, Darmin Nasution, stated that his ministry is currently finalizing the 15th economic policy package to be released soon, though no timeframe has been given. Minister Darmin stated that the major theme will be on logistics-related policies, including the Indonesia National Single Window (INSW).The INSW came into existence in 2007 and is an outcome of the 2003 Bali Concord, in which ASEAN leaders committed to establishing ASEAN Single Window. INSW aims to integrate the export and import licensing process across all of the relevant ministries though this remains to be work in progress. Minister Darmin also stated that his ministry is working in conjunction with the Coordinating Ministry of Maritime Affairs in preparing the package to cut the duration and costs of shipping logistics between regions in Indonesia. This is considered a critical element to the government’s priority of promoting greater connectivity within Indonesia and geographically diversifying domestic centers of economic growth. As a background, Indonesia previously issued its 14th economic policy package in December 2016, focusing on e-commerce. 

State-Owned Enterprise Holdings Plan Face Criticism

The Indonesian government is proceeding with its plan to transform its many state owned enterprises (SOE’s) into a smaller number holding companies, with the government set to no longer provide state-capital injections in 2017. According to Rini Soemarno, State-Owned Enterprises Minister, the purpose of such holding companies is to create more efficient organizational structures to be support the business development of the enterprises without relying on the state budget. The target is to form six state-owned holding companies in the sectors of:

  • oil and gas;
  • mining;
  • toll road;
  • finance;
  • housing; and
  • food.

The government has issued Government Regulation No. 72 of 2016 dated December 30, 2016 (available in Bahasa Indonesia) as a legal basis for the establishment of such holding companies though it is now facing criticism as there are assertions of non-compliance with state finance laws. One criticism is that the capital injection mechanism does not include the supervisory function of the Supreme Audit Agency (Badan Pemeriksa Keuangan – BPK) which is mandatory for state-owned enterprises. Minister Rini Soemarno however has stated that no rule has been broken and that the mechanism is in line with the state finance laws.  It should be noted that this reform effort is significant to Indonesia’s economy given the financing roles that SOE’s play in key industries such as infrastructure and emerging sectors such as startups/entrepreneurs.

New Ministerial Regulations on Electricity

On February 2, the Ministry of Energy and Mineral Resources (Energi dan Sumber Daya Mineral – ESDM) announced three new ministerial regulations on electricity. The new regulations were issued in the context of supporting the Indonesian government’s plan to exponentially increase the nation’s electricity production capacity by 2019. The program was first initialized by former president Susilo Bambang Yudhoyono during his first presidential term in 2005, which targeted to add 10 GW of electricity capacity. President Joko “Jokowi” Widodo has since expanded the plan to procure 35 GW by 2019 though the target is now being recalculated. According to Ignasius Jonan, ESDM Minister, Indonesia currently utilizes 51 GW and will be adding 19 GW by 2019.

The new regulations are:

  1. Minister Regulation No. 10 of 2017 on electricity sale and purchase agreements, which aims to regulate the risk management between independent power plants as sellers and the government-owned PLN as the purchaser. The regulation also caps the contract term to be a maximum of 30 years.
  2. Minister Regulation No. 11 of 2017 on gas-based power plants, which specifically focuses on natural gas utilized for power plants. 
  3. Minister Regulation No. 12 of 2017 on renewable energy-based power plants, which discusses the efficient utilization of energy resources.
Please click here for the official fact sheet containing summarized provisions of the regulations (available in Bahasa Indonesia).
 
IN THIS UPDATE
 
 
Regional Affairs
Indonesia can be a force for regional stability as the US and China duel on the world economic stage
Trump's tax plans and how they affect Indonesia
Indonesia to stress ASEAN unity in golden anniversary
Multilateral trade preferred over bilateral, plurilateral: WTO

National Affairs
Indonesia pins hopes for growth on direct investment
Govt Releases Policy Package to Improve Welfare and Reduce Inequality
Trump Trade Risk to Next Asian Economic Tigers Seen in Indonesia
Jokowi urges bureaucratic rivalries to end
Indonesia seeks ‘back up' of US investment: BKPM
Indonesia Attracts Tepid Foreign Direct Investment Inflow in Q4
Government to maintain budget deficit policy to stoke growth
Vice President receives US Ambassador
Indonesia Scraps Plan to Join TPP
Indonesia reconsidering TPP plans, eyes bilateral deals
At $46 billion, 2016 direct investment beats govt target
2nd round of negotiations kicks off for Indonesia-EU CEPA

Market Development
Indonesia planning to set up Jakarta halal economic zone

Customs
Minister Prepares Concentrate Export Duty Regulation
Association Complaints Over-the-Roof Import Cargo Tariffs
Government launches import facility for export-oriented SMEs
Sri Mulyani Provides Incentives for SMEs
Gov’t Turns to RCEP as US Scraps TPP
Jokowi to Impose Heavy Penalties on Smugglers, Accomplices
Applications For Transshipment Business Licence In ESSZone Need To Go Through BIMP-EAGA - Roselan

Defense & Security
Indonesia, Greece Eye Stronger Defense Ties
Trump administration looks to expand defence ties with Indonesia

Energy
Oil-Gas Revenue Down on Lack of Exploration
Pertamina uses gross-split to manage eight oil and gas blocks
BKPM Introduces Rapid Licensing Services
Pertamina Now Controling Shareholder at France's Second Biggest Oil Company
Indonesia's thirst for oil sends Pertamina on global quest
Energy ministry signs contracts worth $21.3 million
Minister Jonan: 35,000 MW Program Completion Will be Delayed
Government to issue new mineral export duty rate
Energy planning policy finally signed by President
35,000 MW program achievable by 2021: DEN
ADB Supports Indonesian Clean Energy with $109 Million Financing for Geothermal

Financial Services
OJK, Ombudsman team up to improve financial sector services
BI, ministers prepares six measures to curb inflation risks
OJK should let government kill bank secrecy rules
Indonesian banking giants to integrate their cashless payment services
The OJK Issues New Regulation on Licensing and Institution of Insurance and Reinsurance Companies

Food & Agriculture
Palm oil product exports to EU to rise despite 'negative campaign'
Government has no plan to import rice this year
Indonesia to Set Feb Crude Palm Oil Export Tax at $18 per Ton
Indonesia Should Import Food If Necessary to Maintain Prices: C. Bank Gov
Cattle breeding center will be developed on prison island
Fertilizer factory worth $1.5b to be developed in Papua

Health & Life Sciences
Testing of New Vaccines Still Underway: Ministry of Health

ICT
Indonesia, Australia strengthen cyber-security ties

Infrastructure
Jokowi Meets ADB; Discusses Tax, Infrastructure
Gov`t to Build New Economic Centers
Indonesia aims for a slice of Singapore's sea cargo traffic
Tanjung Priok Shaping Up to be Transshipment Hub

Manufacturing
Indonesia manufacturing PMI rises to 50.4 in January-
Indonesia’s pulp factory capacity to reach 10 million tons per year
Financing still troubles small businesses
Mercedes-Benz plans to assemble more models in Indonesia
 
ARTICLE CLIPS
 
 
Regional Affairs

Indonesia can be a force for regional stability as the US and China duel on the world economic stage South China Morning Post 1st Feb 2017
Something amazing is occurring, but so unsettling are the times that few realise the gravity of the change. Under its radical new leader, the United States is turning inwards. President Donald Trump used his inaugural address on January 20 to underline a key theme of his campaign: he would restore America to greatness by bringing back American jobs, borders, wealth and dreams.

Trump's tax plans and how they affect Indonesia The Jakarta Post 1st Feb 2017
So, Donald Trump has been inaugurated as the 45th president of the United States to a rather skeptic a reaction from people around the world. It is worth noting, however, that on his way to being sworn in as the most powerful person in the free world, he broke some amusing records too. For instance, Trump is the only president ever without political or military experience for the office that has a 227-year standing.

Indonesia to stress ASEAN unity in golden anniversary The Jakarta Post 1st Feb 2017
Indonesia will continue to throw its weight behind ASEAN because all member states stand to benefit from a united front in anticipating a world of increasing uncertainty, a top diplomat has said. Looking back on experiences in the past year, Foreign Minister Retno LP Marsudi said extra efforts were required to ensure solidarity in developing a regional organization that was a real community.

Multilateral trade preferred over bilateral, plurilateral: WTO The Jakarta Post 23rd Jan 2017
World Trade Organization (WTO) member countries have agreed that multilateral trade negotiations are better than bilateral and plurilateral trade as it avoids the domination of trade rules by one country amid growing protectionism concerns. "The system managed by the WTO is the best multilateral trade scheme today," Trade Minister Enggartiasto "Enggar" Lukita said after an informal meeting with WTO country members' ministers on Saturday on the sidelines of the World Economic Forum in Davos, Switzerland.

National Affairs

Indonesia pins hopes for growth on direct investment The Jakarta Post 2nd Feb 2017
To achieve its 2017 target of economic growth above 5 percent, the government aims for investment to increase at a rate of 5.4 percent to 5.6 percent this year. National Development Planning Board (Bappenas) head Bambang Brodjonegoro said that while growth of household consumption could be maintained at around 5 percent, the rate would not rise further. The same went for exports, which are expected to increase by no more than 1.7 percent.

Govt Releases Policy Package to Improve Welfare and Reduce Inequality Jakarta Globe 1st Feb 2017
The Indonesian government released another policy package called the "Economic Justice Policy" aimed at improving welfare and reducing inequality in the country on Tuesday (31/01). The package contains policy reforms in three areas, including the land and agriculture sector, access to capital for micro, small and medium-sized enterprises.

Trump Trade Risk to Next Asian Economic Tigers Seen in Indonesia Bloomberg.com 31st Jan 2017
U.S. President Donald Trump’s trade policies could dash the hopes of emerging Asian economies seeking to emulate China’s early development, according to former Indonesian finance minister Chatib Basri. Signs that Trump is embarking on an era of American protectionism -- heightened after he nixed the U.S.-led Trans-Pacific Partnership pact and by his threats to start a trade war with China -- are causing anxiety across Southeast Asia. Indonesia, which was not a party to the TPP but had said it would consider joining, is now focusing on an alternative Asia deal that China has begun championing.

Jokowi urges bureaucratic rivalries to end The Jakarta Post 31st Jan 2017
President Joko "Jokowi" Widodo has called on his Cabinet ministers to put their egos aside to work together and make sure that their respective prioritized programs are successful. "We have to let go of these sectoral egos. Our ‘in-the-box’ ways of thinking tend to be an obstacle to our objectives," he said just before a closed-door Cabinet meeting was set to take place at Bogor Palace in West Java on Tuesday.

Indonesia seeks ‘back up' of US investment: BKPM The Jakarta Post 30th Jan 2017
Indonesia may have to put a little more effort into making itself attractive for United States investors in the wake of a protectionist Donald Trump presidency, Investment Coordinating Board (BKPM) head Thomas "Tom" Lembong said on Monday. The Indonesian government will also simultaneously try to seek "back up" investors from other countries in case US firms have to abide by policies made by President Trump, Lembong said but did not elaborate.

Indonesia Attracts Tepid Foreign Direct Investment Inflow in Q4 Jakarta Globe 29th Jan 2017
Growth in foreign direct investment (FDI) slowed significantly in Indonesia in 2016's final quarter, which could dent efforts to boost the rate at which Southeast Asia's largest economy is expanding. Analysts said tepid FDI figures for October-December might reflect political tensions seen in Jakarta ahead of regional elections in February, and worry about the prospects for emerging markets after Donald Trump's election as United States president.

Government to maintain budget deficit policy to stoke growth The Jakarta Post 26th Jan 2017
The government plans to maintain its budget deficit policy in a bid to keep boosting infrastructure development nationwide, which is expected to stoke economic growth in the long run. “Our deficit level is still relatively better compared to other countries around the world. Hence, we will carefully maintain our financing strategy out of this deficit level,” Finance Minister Sri Mulyani Indrawati said in Jakarta on Thursday.

Vice President receives US Ambassador Antara News 26th Jan 2017
Vice President Jusuf Kalla received the first courtesy call from the United States Ambassador to Indonesia, Joseph R Donovan, on Wednesday, after the latters credential was submitted to President Joko Widodo on January 11, 2017. "Today, I convey the strong desire of the United States to be a good partner with Indonesia, and we have a very strong commitment to enhance the strategic partnership in the years to come," Donovan said in the Office of the Vice President.

Indonesia Scraps Plan to Join TPP Tempo 25th Jan 2017
The Indonesian government is likely to scrap its plan to join the Trans-Pacific Partnership if the United States withdraws from the forum, Dewi Fortuna Anwar, deputy for government policy supports at the Vice Presidential Secretariat said on Wednesday, January 25, 2017. “So, the focus is to build a mutual bilateral relationship,” Dewi said after welcoming the US Ambassador to Indonesia Joseph Donovan at the Vice Presidential Office in Jakarta on Wednesday, January 25, 2017. On the other hand, the government doubts that President Donald Trump would implement a protectionism policy.

Indonesia reconsidering TPP plans, eyes bilateral deals Reuters 25th Jan 2017
Southeast Asia's biggest economy is also reconsidering its intention to join the TPP, Dewi Fortuna Anwar, deputy secretary of the office of the vice president, told Reuters. "Our emphasis going forward is more on a bilateral economic cooperation between the Republic of Indonesia and the U.S.," Anwar said. "It would be a comprehensive bilateral cooperation, including for trade and investment," she said. Indonesian Vice President Jusuf Kalla met the U.S. ambassador to Indonesia, Joseph R Donovan, on Wednesday to discuss ways to increase trade between the two economies.

At $46 billion, 2016 direct investment beats govt target The Jakarta Post 25th Jan 2017
Realized direct investment from local and foreign entities increased by 12.4 percent to Rp 612.8 trillion (US$45.97 billion) last year from Rp 545.4 trillion in 2015, beating the government’s target of Rp 594.8 trillion. Investment Coordinating Board (BKPM) head Thomas Lembong said local investment had grown by 20.5 percent to Rp 216.2 trillion, outpacing foreign investment, which had risen by 8.4 percent to Rp 396.6 trillion.

2nd round of negotiations kicks off for Indonesia-EU CEPA The Jakarta Post 24th Jan 2017
A second round of negotiations for the Comprehensive Economic Partnership Agreement (CEPA) between Indonesia and the European Union (IEU-CEPA) kicks off on Tuesday and is set to end on Friday in Bali. "In this round, we'll follow up modal [negotiations], leveling perceptions of each party's ambitions and clarifying drafts suggested by each delegate," Iman Pambagyo, international trade negotiation director general with the Trade Ministry, said in a press statement.

Market Development

Indonesia planning to set up Jakarta halal economic zone Gulf-Times 31st Jan 2017
Thee world’s most populous Islamic country, Indonesia, in its quest to broaden the Islamic economy in the country, is considering the establishment of a halal economic zone in the capital Jakarta, according to the National Development Planning Board. Such a zone could include Islamic banks and financial institutions, as well as halal restaurants, hotels, malls, halal fashion boutiques and halal entertainment, the board’s Shariah economy expert Adiwarman Karim said at a panel discussion themed “Jakarta as the Center of Islamic Finance” in Jakarta last week.

Customs

Minister Prepares Concentrate Export Duty Regulation Tempo 3rd Feb 2017
Finance Minister Sri Mulyani Indrawati said that Energy and Mineral Resources Minister Ignasius Jonan has sent a letter in relation to export duty for exports of mineral concentrates. Sri Mulyani revealed that the proposal would be implemented through a Finance Minister Regulation. "We will draft a ministerial regulation within a few days.

Association Complaints Over-the-Roof Import Cargo Tariffs Tempo 31st Jan 2017
Customs and Transportation Administration Services company (PPJK) at the Tanjung Priok Port urged the illegal levy extermination team to eradicate high-cost illegal levies in the less than container load (LCL) import cargo services within the port's premises. M. Qadar Jafar, Chief of Tanjung Priok PPJK Forum stated that PPJK companies have suffered massive losses because of out-of-control tariffs applied by import cargo consolidators who disguised themselves as freight forwarder companies.

Government launches import facility for export-oriented SMEs The Jakarta Post 30th Jan 2017
The government has introduced what it calls an Import Tax Waiver for Materials for Export Oriented Goods(KITE) to annul import taxes and other tariffs for export-oriented small and medium enterprises (SMEs). The measures would reduce production costs for export-focused businesses by up to 25 percent, President Joko "Jokowi" Widodo said when launching the policy in Tumang Village, Boyolali, Central Java, on Monday.

Sri Mulyani Provides Incentives for SMEs Tempo 30th Jan 2017
The Directorate General of Customs and Excise has decided to facilitate capital goods and raw material imports for small-medium enterprises (SMEs). The initiative is expected to reduce production costs and at the same time, increase cash flow. The new regulation is also hoped to improve businesses activities in the domestic and international market. "Import and export process will be facilitated [by providing] simple import procedure, selective physical examination, postponing import restrictions, and simplifying imports through a special app," said Finance Minister Sri Mulyani on Monday, January 30, 2017.

Gov’t Turns to RCEP as US Scraps TPP Tempo 27th Jan 2017
The government will focus on discussing the Regional Comprehensive Economic Partnership (RCEP) after US President Donald Trump scrapped a plan to join the Trans-Pacific Partnership. Rizal Affandi Lukman, deputy of international economic cooperation at the Coordinating Economic Minister, said that the government will also focus on discussing the Comprehensive Economic Partnership Agreement (CEPA) with the European Union.

Jokowi to Impose Heavy Penalties on Smugglers, Accomplices Jakarta Globe 26th Jan 2017
President Joko "Jokowi" Widodo has instructed National Police chief Gen. Tito Karnavian and Attorney General H.M. Prasetyo to impose heavy penalties on persons convicted of smuggling and helping smugglers. Jokowi said that law enforcement measures to tackle smuggling must be concrete, as illegal products that enter the Indonesian market not only damage the country's finances, but also threaten the future of local industries.

Applications For Transshipment Business Licence In ESSZone Need To Go Through BIMP-EAGA - Roselan Bernama 26th Jan 2017
The application process for transshipment licence or ship to ship transfer from Sabah to the Philippines would require the recommendation of the East ASEAN Growth Area (BIMP-EAGA) which is made up of Brunei, Indonesia, Malaysia and the Philippines. BIMP-EAGA chairman Datuk Roselan Johar Mohamed said the application for business licence was opened following the Sabah state government's decision to allow the transshipment business activities with the Philippines effective Feb 1 after it was suspended since April last year.

Defense & Security

Indonesia, Greece Eye Stronger Defense Ties The Diplomat 1st Feb 2017
On January 25, the secretary general of Indonesia’s defense ministry received a courtesy call from Greece’s ambassador to Indonesia Georgios Dogoritis. The development placed the spotlight on the growing defense partnership between the two countries. The idea of more defense collaboration between Indonesia and Greece would make sense for both sides.

Trump administration looks to expand defence ties with Indonesia IHS Jane's Defence Weekly 31st Jan 2017
The new US administration led by President Donald Trump has outlined a commitment to expand defence collaboration with Indonesia, the Ministry of Defence (MoD) in Jakarta said on 30 January. Following meetings between Indonesian defence minister Ryamizard Ryacudu and the newly appointed US ambassador to Indonesia, Joseph R Donovan, the MoD said both countries would look to expand defence co-operation across a number of activities.

Energy

Oil-Gas Revenue Down on Lack of Exploration Tempo 1st Feb 2017
Rionald Silaban, the Finance Ministry's macroeconomic and international finances expert, said the oil and gas sector is no longer a reliable source of state revenues. Its revenue contribution has declined significantly from Rp198 trillion in 2012 to just Rp78 trillion in 2015. Speaking at a discussion held by Tempo at the Aryaduta Hotel in Jakarta on Wednesday, January 31, Rionald said that the sector's contribution is down over the lack of exploration activities.

Pertamina uses gross-split to manage eight oil and gas blocks The Jakarta Post 31st Jan 2017
The Energy and Mineral Resources Ministry has given full authority to state-owned energy company PT Pertamina to manage eight oil and gas blocks whose third-party are set to expire in 2018. Pertamina upstream director Syamsul Alam said his company would use a gross-split sliding scale production sharing contract to manage the blocks. “The block contracts that would be terminated would be managed using the gross split,” said Syamsu as reported by tempo.co on Tuesday.

BKPM Introduces Rapid Licensing Services Tempo 30th Jan 2017
The Indonesia Investment Coordinating Board (BKPM) recently launched a 3-Hours Rapid Licensing Services in relation to infrastructure development in the energy and mineral resources (ESDM) sector. The new rapid licensing service was officially launched by BKPM Chairman Thomas Trikasih lembong and ESDM Minster Ignasius Jonan.

Pertamina Now Controling Shareholder at France's Second Biggest Oil Company Jakarta Globe 29th Jan 2017
Pertamina International Exploration and Production, a subsidiary of Indonesia's state energy company Pertamina, announced another successful bid for more stake in French oil company Maurel and Prom, that increased its ownership at the Paris-based company from 24.53 percent to 64.46 percent.

Indonesia's thirst for oil sends Pertamina on global quest Nikkei 27th Jan 2017
Pertamina, Indonesia's state-run oil company, is expanding its overseas footprint to help meet surging demand at home. Including domestic oil and gas projects, the company plans to boost investment by 40% from the actual 2016 figure, to $3.7 billion in 2017. Its foreign investments include projects in Russia and Iran. The idea is to invest aggressively abroad to offset a downtrend in domestic output and shore up overall volumes. This is vital as Indonesia's brisk economic growth drives up energy consumption; domestic production is no longer enough to satiate demand for oil products, including gasoline.

Energy ministry signs contracts worth $21.3 million The Jakarta Post 26th Jan 2017
The Energy and Mineral Resources Ministry has signed off on contracts for 134 procurement of goods and services packages for the first phase of the 2017 state budget. The packages are worth a total Rp 284 billion (US$21.3 million). Energy and Mineral Resources Minister Ignasius Jonan acknowledged that the contracts signed only made up around 10 percent of the 2017 target.

Minister Jonan: 35,000 MW Program Completion Will be Delayed Tempo 25th Jan 2017
Energy and Mineral Resources Minister Ignasius Jonan predicted that the construction of 35,000 megawatt (MW) power plants would not be fully completed in 2019 due to the economic slowdown. Jonan explained the project was designed with an assumption of economic growth of 8 percent per year. However, Indonesia managed to attain an annual economic growth of 5 percent over the last two years.

Government to issue new mineral export duty rate The Jakarta Post 24th Jan 2017
The government is set to issue a new regulation on raw mineral export duties, with the rate to be based on smelter development progress. Discussions with the Energy and Mineral Resources Ministry have almost been finalized and the export rate will reflect the development of the downstream industry, according to Finance Minister Sri Mulyani.

Energy planning policy finally signed by President The Jakarta Post 23rd Jan 2017
A presidential regulation on the General Planning for National Energy (RUEN) has finally been signed by President Joko “Jokowi” Widodo, a National Energy Board (DEN) member has said. “According to the energy and mineral resources minister, the RUEN, as our national energy policy, has been signed by the President,” DEN member Tumiran said during a press conference on Monday.

35,000 MW program achievable by 2021: DEN The Jakarta Post 23rd Jan 2017
The National Energy Board (DEN) has estimated that the government’s ambitious program to procure 35,000 megawatts (MW) of electricity can only be completed as early as 2021, two years after the project’s designated deadline. DEN member Rinaldy Dalimi said the timeframe, however, was still an optimistic estimate, as state-owned electricity company PLN would need two to three years to complete construction after financial closure.

ADB Supports Indonesian Clean Energy with $109 Million Financing for Geothermal Asian Development Bank 27th Jan 2017
The Asian Development Bank (ADB) signed yesterday a new $109 million financing package for the Muara Laboh geothermal power generation project in western Indonesia. The financing, which was approved in December 2016, is part of ADB's efforts to scale up private sector-led infrastructure development in Asia and the Pacific and boost support for clean energy. The project will be one of the first transactions to receive funding from ADB’s newly established Leading Asia’s Private Infrastructure Fund (LEAP).The Fund is capitalized by $1.5 billion in equity from Japan International Cooperation Agency (JICA), and is managed by ADB's Private Sector Operations Department. With the Muara Laboh approval and other recent LEAP financings, over $200 million of LEAP funds have been allocated. On completion, the Muara Laboh geothermal facilities, located in West Sumatra, will generate 80 megawatts of electricity. Indonesia contains about 40% of the world’s geothermal reserves, making it an important resource for the country to achieve its commitments to reduce carbon dioxide emissions by 29% by 2030.

Financial Services

OJK, Ombudsman team up to improve financial sector services The Jakarta Post 28th Jan 2017
The Financial Services Authority (OJK) and the Indonesian Ombudsman have agreed to work together to prevent potential disputes in the financial sector as people’s awareness of the industry continues to rapidly rise. In a speech during the signing of the cooperation agreement on Friday, Ombudsman chairman Amzulian Rifai said the cooperation was important as the Ombudsman had seen an increasing number of complaints regarding public services in the financial sector, something that should be handled first by the OJK if the cases could still be resolved within the financial authority’s domain.

BI, ministers prepares six measures to curb inflation risks The Jakarta Post 26th Jan 2017
Bank Indonesia (BI) and the government have agreed to prepare six strategic measures to maintain the country's inflation this year, as consumer prices are predicted to be in an upward trend due to adjustments in levies and subsidies. The set of measures was arranged in a “high-level coordination meeting” on Wednesday held among members of the Inflation Task Force (TPI) and Regional Inflation Task Force (TPID), which comprises officials from the central bank, ministries, state agencies and regional administrations.

OJK should let government kill bank secrecy rules The Jakarta Post 30th Jan 2017
Recent comments by the commissioner for banking supervision of the Financial Services Authority (OJK) indicated that because of international pressure toward greater transparency, the OJK is willing to share financial information with the Directorate General of Taxation.

Indonesian banking giants to integrate their cashless payment services e27 25th Jan 2017
Four Indonesian major commercial banks –from state-owned Bank Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), to privately owned Bank Central Asia (BCA)– today announced a plan to integrate their cashless payment services under one network. The partnership is an implementation of a recent MoU on interconnectivity and interoperability, in order to support the country’s National Payment Gateway (NPG) programme, as initiated by its central bank Bank Indonesia.

The OJK Issues New Regulation on Licensing and Institution of Insurance and Reinsurance Companies Baker McKenzie 23rd Jan 2017
On 23 December 2016 the Financial Services Authority (OJK) issued Regulation No. 67/POJK.05/2016 on Licensing and Institution of Insurance Companies, Syariah Insurance Companies, Reinsurance Companies and Syariah Reinsurance Companies (Regulation 67). Regulation 67, which became effective on 28 December 2016, provides more comprehensive provisions on licenses and requirements for insurance and reinsurance companies.

Food & Agriculture

Palm oil product exports to EU to rise despite 'negative campaign' The Jakarta Post 1st Feb 2017
Despite an extensive "negative campaign" about Indonesian palm oil products and falling exports to most countries worldwide, exports to the European Union increased by 3 percent to 4.4 million tons in 2016, up from 4.2 million tons in 2015, as the commodities are much needed in the EU food industry. "EU governments continue to claim that palm oil is bad for health, but the demand keeps increasing every year," said Togar Sitanggang, secretary-general of the Indonesian Association of Palm Oil Producers (GAPKI) during a media briefing on Tuesday.

Government has no plan to import rice this year The Jakarta Post 31st Jan 2017
The government has expressed its optimism that the country’s rice harvest will be adequate to meet the market demand this year. State logistics agency (Bulog), whose function is to stabilize rice prices, allocates for no rice imports this year.

Indonesia to Set Feb Crude Palm Oil Export Tax at $18 per Ton Jakarta Globe 29th Jan 2017
Indonesia will set its export tax for crude palm oil (CPO) in February at $18 per metric ton, up from $3 per metric ton this month, the country's trade ministry said on Friday (27/01). The tax will be increased as the government's reference export price for crude palm oil is seen rising above a threshold of $800 per metric ton, the ministry said in a statement.

Indonesia Should Import Food If Necessary to Maintain Prices: C. Bank Gov Jakarta Globe 25th Jan 2017
Indonesia's central bank governor said on Wednesday the government should import food in case of natural disasters or weather-induced crop failure to keep inflation within target. Governor Agus Martowardojo said plans to raise government-controlled prices for power, liquefied petroleum gas and fees for vehicle registration would push the inflation rate up to more than 4 percent this year compared with 3.02 percent in 2016.

Cattle breeding center will be developed on prison island The Jakarta Post 23rd Jan 2017
The government plans to develop a cattle breeding center on the Nusakambangan prison island in Cilacap regency, Central Java, with the inmates to be employed in the husbandry business. The program under a state and private firm collaboration scheme will begin in 2018 on a 20-hectare plot of land controlled by the state penitentiaries, said the Law and Human Rights Ministry’s director general of penitentiaries, I Wayan Dusak, on Monday.

Fertilizer factory worth $1.5b to be developed in Papua The Jakarta Post 23rd Jan 2017
Trade Minister Airlangga Hartarto has lauded a plan by state-owned fertilizer company PT Pupuk Indonesia and Germany based Ferrostaal to develop a fertilizer factory in Bintuni Bay, West Papua. The two companies have agreed to carry out a feasibility study for the US$1.5 billion project.

Health & Life Sciences

Testing of New Vaccines Still Underway: Ministry of Health Jakarta Globe 23rd Jan 2017
Minister of Health Nila F. Moeloek said that three vaccines which were originally scheduled to be released this year are still being tested for their usefulness and benefits. The Ministry of Health announced earlier that it will implement a vaccination program in 2017 for measles, mumps, and rubella, or MMR; Streptococcus pneumoniae, or pneumococcus; and human papillomavirus, or HPV. “The cervix cancer vaccine [HPV] is currently being tested in Jakarta, so we’ll see,” Nila said, as quoted by Antara news agency on Tuesday (17/01) in Jakarta.

ICT

Indonesia, Australia strengthen cyber-security ties The Jakarta Post 3rd Feb 2017
Australia and Indonesia agreed on Thursday to focus on cyber security in their fight against terrorism and transnational crimes after a meeting in Jakarta. The agreement was reached at the third ministerial council meeting on security and law despite the ongoing suspension of military cooperation between the two countries.

Infrastructure

Jokowi Meets ADB; Discusses Tax, Infrastructure Tempo 1st Feb 2017
President Joko Widodo and President of the Asian Development Bank (ADB) Takehito Nakao met at the Merdeka Palace in Jakarta on Wednesday, February 1, 2017. The two discussed the economic challenges faced by Indonesia. "The President explained about the many issues related to our economic progress and the challenges faced today and in the future," Finance Minister Sri Mulyani Indrawati said in a press conference on Wednesday, February 1, 2017.

Gov`t to Build New Economic Centers Tempo 29th Jan 2017
The government announced that it would continue building new economic centers in several regions, particularly in eastern Indonesia. "The sea toll program is already under way. We can feel the impacts already. Prices of commodities in eastern Indonesia have dropped and will further drop with new economic centers,” said Coordinating Minister for Maritime Affairs Luhut Binsar Panjaitan on Saturday (28/1/2017).

Indonesia aims for a slice of Singapore's sea cargo traffic The Straits Times 26th Jan 2017
Indonesia plans to beef up its port services by consolidating cargo traffic from various facilities across the country at Tanjung Priok in North Jakarta, its largest and most advanced seaport. The move to centralise transshipment activities is aimed at taking over a slice of the market currently dominated by Singapore, The Jakarta Post reported yesterday.

Tanjung Priok Shaping Up to be Transshipment Hub Tempo 25th Jan 2017
The government plans to make the Port of Tanjung Priok, North Jakarta, as a consolidated harbor known as a transshipment hub. Every international shipment would depart and arrive at this port that’s managed by PT Pelindo. According to President Director of Pelindo II, Elvyn Masassya, consolidating international cargo at Tanjung Priok would be logistically cost efficient. She predicts that the efficiency rate would reach Rp 1.5 million per container.

Manufacturing

Indonesia manufacturing PMI rises to 50.4 in January- Nikkei Asian Review 1st Feb 2017
The Nikkei Indonesia Manufacturing Purchasing Managers' Index, or PMI, rose to 50.4 in January from 49.0 in December. A reading above 50 indicates economic expansion, while one below 50 points toward contraction. January's PMI shows the first improvement in the country's business conditions in four months. "PMI data showed that the upturn was domestically driven as new export orders dipped again," Pollyanna De Lima, economist at IHS Markit said.

Indonesia’s pulp factory capacity to reach 10 million tons per year The Jakarta Post 31st Jan 2017
The capacity of pulp factories will increase from 7.93 million tons to 10.43 million tons per year in February when PT OKI Pulp & Paper Mills (OKI) starts the production of its new pulp factory with a 2.5 million-ton production capacity, the Industry Ministry has said.Meanwhile, national paper production stands at 12.98 million tons per year, the ministry said in its statement on Monday.

Financing still troubles small businesses The Jakarta Post 25th Jan 2017
Manufacturing is a priority economic sector for Indonesia to promote inclusive growth. According to the Central Statistics Agency (BPS), there are more than 3.6 million manufacturing units in Indonesia that can be categorized as micro and small enterprises. These small businesses are an important source of employment and contribute significantly to the national output.

Mercedes-Benz plans to assemble more models in Indonesia The Jakarta Post 24th Jan 2017
The local unit of German car manufacturer Daimler AG says it wants to assemble more product lineups in Indonesia to help boost sales and increase the utilization of its local plant. President director of Mercedes-Benz Distribution Indonesia (MDI), the local distribution unit of the firm, Roelof Lamberts, said Tuesday that his side was considering assembling the entry level cars A-Class and B-Class in its plant in Wanaherang, Bogor, West Java after the E-Class recently.