Indonesia Update: November 29, 2018

Indonesia Update | November 29, 2018
Authors: Kim Yaeger, Artha Sirait, Angga Antagia and Bryan Yeoh
 
 
THE COUNCIL'S TAKE
 
 

BPOM Issues New Labeling Regulation

The National Agency of Drug and Food Control (BPOM) recently issued BPOM Regulation No. 31 of 2018 on the Labeling of Processed Food (Regulation 31/2018). This regulation provides guidelines on food labeling and the types of information which are required on processed food labels prior to purchase and/or consumption by the public. The issuance of this regulation automatically revokes previous BPOM regulations on food labeling, namely BPOM Regulation No. 27 of 2017; BPOM Regulation No. 23 of 2016; and BPOM Regulation No. HK.03.1.23.06.10.5166 dated 2010.

Regulation 31/2018 requires all domestically produced and imported processed foods to have labels affixed to them. According to Articles 5 and 7 of the regulation, the labels must be written in Bahasa Indonesia (if there is no equivalent wording in Bahasa Indonesia for a particular term, foreign terms may be used as substitution), with 2D barcodes and more information such as allergens contained in the product. The label has to at the very least contain information on the:

  • name of the product;
  • ingredients;
  • net weight;
  • name of the producer or importer;
  • halal certification for items that are required to be halal. Regulation 31/2018 does not regulate further on halal certification, instead it refers to prevailing laws. Indonesia’s prevailing law on halal is Law No. 33 of 2014, which currently awaits implementing regulations. BPJPH (Halal Product Assurance Agency) under the supervision of the Ministry of Religious Affairs is in charge of drafting the implementing regulations;
  • date and production code;
  • expiration information;
  • distribution permit number; and
  • the origins of certain foods.

Foods containing pork must follow the mandatory label and wording as prescribed in Article 40 of Regulation 31/2018.

The regulation also addresses the longstanding issue of labels for condensed milk in Indonesia by requiring producers to include additional disclaimers and restricts businesses from including any statements or claims on labels that promote food products as healthy, nutritionally superior, able to fulfill all nutritional needs, able to be used as medicine or to boost intelligence. A full list of the prohibitions can be found in Article 67 of Regulation 31/2018.

Regulation 31/2018 entered into force on October 19, 2018 with a 30-month grace period. Businesses has until April 19, 2021 to comply.

Jokowi Signs Presidential Regulation to Ratify Seven Trade Agreements

President Jokowi signed a presidential regulation on November 13 to ratify seven trade agreements. His action comes right after a group of Cabinet Minister had agreed to hasten the signing of the trade agreements just less than a week ago. Among the ratified agreements include the ASEAN-Australia-New Zealand FTA (AANFZTA), ASEAN-India FTA (AITISA), ASEAN-Korea FTA, ASEAN-China FTA, ASEAN agreement on medical device directive, the ninth protocol of the ASEAN framework agreement on services and the Indonesia-Pakistan preferential trade agreement (IP-PTA). According to Trade Ministry Secretary-General Karyanto Suprih, the next step would be to forward the regulation to the Law and Human Rights Ministry for promulgation.

The Indonesian government is keen to boost its economy by gaining access to more markets and lowering barriers to export its goods. The signing of the IP-PTA ensures continued access for Indonesia to export its crude palm oil to Pakistan while the AANZFTA would allow Indonesian exporters preferential tariffs to Australia and New Zealand.

Among the trade agreements still pending for Indonesia include the Indonesia-Australia Comprehensive Economic Partnership Agreement (IA-CEPA), the Regional Comprehensive Economic Partnership (RCEP) and the Preferential Trade Agreement (PTA) scheme with Mozambique, Tunisia and Morocco. In an interview last October, Trade Minister Enggartiasto Lukita stated that he expects Indonesia to sign thirteen trade agreements. Enggartiasto has also engaged South Korea in informal talks on the sidelines of the ASEAN Summit over the possibility of reviving negotiations for the Indonesia-Korea Comprehensive Economic Partnership.

 
 
IN THIS UPDATE
 
 
Multilateral Trade Agreements
Indonesia to sign free trade deal with EFTA countries in December

Regional Affairs
Indonesia president doubts US-China can patch up dispute at G20

National Affairs
President Jokowi to Improve Human Resources in 2019  
Prabowo-Sandiaga Receive Support from Descendants of NU Founder
Indonesia claims to secure 20 year-low unemployment rate

Customs
Indonesia to keep CPO export tax at zero, cocoa at 5 pct for Dec
Customs Optimistic Excise Duty on Plastic Applicable in 2019
Jokowi ratifies seven trade agreements
Morrison to try to rescue Indonesia free trade deal amid Israel embassy friction
Ministry of Finance Provides More Detailed Provisions on Bonded Zone Under the New Regime
The New Regime of Customs Valuation Advice

Defense & Security
Luhut Projects Rp200tn Budget for TNI
Indonesia registers USD284 million in defence exports | Jane's 360
India, Indonesia launch their maiden naval exercise

Economics
Govt Targeting to Release DNI Revision Rule in December
BI to formulate seven policies to help economy in 2019
BI revises down inflation rate projection to 3.2 percent

Energy
Indonesia Focuses to Expand Palm Oil Market outside Europe
Govt wants to generate 1 GW of rooftop solar power in 3 years
Indonesia Struggles to Meet Renewable Energy Target
Indonesian govt to refund Pertamina up to $1.3 bln for fuel sales...
Pertamina allocates US$5.5bn for capex in 2019
PLN admits electricity still too expensive for industry
PTT signs LNG contract with Tri-Gen
Government to reduce fuel, gas use for electricity
Indonesia, Germany commemorate 25 years cooperation in renewable energy
Indonesia's Energy Subsidy Spending Far Above Target in 2018
Indonesia boosts domestic palm oil consumption as currency pressures mount
PLN issues list of qualified clean energy developers
PLN signs power purchase deal for hydropower plant in Jambi
Auction for early stage geothermal development areas in West Sumatra, Indonesia
Indonesia eyes looser foreign investment caps for geothermal energy

Financial Services
P2P lending transactions total Rp 13.8 trillion in first three quarters
No need for customers of Indonesia's illegal lenders to repay...
Indonesia to consider more easing of liquidity rules in 2019...
OJK issues new regulation to improve customer protection in the financial services sector

Food & Agriculture
Indonesia's coffee outputs to touch 650,000 tons this year
Indonesia launches pangasius brand to target Middle East
Indonesia, Malaysia palm oil stocks seen rising above 8 mil T by year-end — analyst
Sustainable fisheries: A legacy to future generations

Health & Life Sciences
No new polio cases, but Indonesia still at risk
Stunting stunts Indonesia’s demographic dividend

ICT
Indonesia's digital economy to dominate Southeast Asia by 2025
Indonesia's new 'heresy app' draws fire

Infrastructure
Transport Minister Guarantees LRT Project to Finish as Targeted
Indonesia's Lion Air to meet Boeing next week to discuss MAX series orders
Belt and Road investment under fire in Indonesia’s presidential elections
Government tells Go-Jek, Grab to settle problems with drivers

Manufacturing
Govt Remains Focused on Reinforcing Industrialization
Indonesia's motorcycle sales up 8.55 pct in first 10 months - Xinhua | English.news.cn

Travel & Tourism
Solo-Ngawi Toll Road Eases Access to Many Tourism Sites
Airport Tax Hike to Valid per First Dec. 2018
Indonesia gives first report on deadly Lion Air crash on Wednesday
A new Bali on Indonesia’s eastern frontier? The remote Kei Islands see potential in tourism
Indonesia's Merpati Airlines hopes to resume operations in 2019
From Regional Taxes to Water Policy, Hoteliers Face Obstacles in Doing Business in Indonesia
 
ARTICLE CLIPS
 
 
Multilateral Trade Agreements

Indonesia to sign free trade deal with EFTA countries in December Reuters 27th Nov 2018
Indonesia has wrapped up negotiations for a free trade and investment pact with members of the four-nation European Free Trade Association, and a final agreement is due to be signed in December, Indonesia’s trade minister said.

Regional Affairs

Indonesia president doubts US-China can patch up dispute at G20 Channel NewsAsia 27th Nov 2018
Indonesian President Joko Widodo expressed pessimism on Tuesday that the United States and China will resolve their trade dispute when the leaders of the world's two biggest economies meet at the G20 summit in Argentina at the end of this week.

National Affairs

President Jokowi to Improve Human Resources in 2019   Tempo 29th Nov 2018
President Joko `Jokowi` Widodo stated that in 2019, the government would build and improve the quality of Indonesian human resources.

Prabowo-Sandiaga Receive Support from Descendants of NU Founder Tempo 29th Nov 2018
Presidential and vice presidential hopeful Prabowo-Sandiaga received the visit of several descendants of the founders of country’s largest Islamic organization Nahdlatul Ulama (NU). During the visit, the candidate number 02 received support for the 2019 election.

Indonesia claims to secure 20 year-low unemployment rate Xinhua 13th Nov 2018
Indonesia Finance Minister Sri Mulyani Indrawati claimed that the nation has achieved 20 year-low unemployment rate at 5.13 percent that in line with stable high economic growth rate at 5 percent.

Customs

Indonesia to keep CPO export tax at zero, cocoa at 5 pct for Dec Reuters 27th Nov 2018
Indonesia will keep the export tax for crude palm oil (CPO) at zero and the export levy for cocoa at 5 percent for December, Oke Nurwan, a senior official of the trade ministry, told reporters on Tuesday

Customs Optimistic Excise Duty on Plastic Applicable in 2019 Tempo 27th Nov 2018
Finance Minister’s director general of customs and excise Heru Prambudi expressed optimism that a policy on customs duty for non-environmental-friendly plastic could be imposed next year.

Jokowi ratifies seven trade agreements The Jakarta Post 14th Nov 2018
President Joko “Jokowi” Widodo has ratified seven bilateral and multilateral trade agreements by signing a presidential regulation in a bid to boost trade, according to a senior trade official.

Morrison to try to rescue Indonesia free trade deal amid Israel embassy friction the Guardian 13th Nov 2018
Scott Morrison will attempt to rescue the Australia-Indonesia free trade agreement in his first meeting with Joko Widodo on the sidelines of the Asean summit in Singapore.

Ministry of Finance Provides More Detailed Provisions on Bonded Zone Under the New Regime Baker McKenzie 19th Nov 2018
In a new regulation, the Minister of Finance (MOF) has shifted the authority to issue bonded zone licenses from the Directorate General to the Head of Customs Regional Office. The new regulation provides for the OSS system, a newly-developed system for licensing in Indonesia and it further stipulates that companies that would like to apply for a bonded zone license must have a Business Identification Number (Nomor Induk Berusaha - NIB). Please click here to see our publications on the OSS system.

The New Regime of Customs Valuation Advice HHP Law Firm 15th Nov 2018
Previously, Indonesia’s customs authority ("Customs") helped importers with customs valuations by providing customs advice and valuation rulings. Importers that needed definite advice or certainty about the customs value of its imported goods could submit a request to Customs to obtain customs advice and valuation ruling.

Defense & Security

Luhut Projects Rp200tn Budget for TNI Tempo 28th Nov 2018
The government said that the budget raise for the National Army (TNI) would be adjusted to the state income growth. Coordinating Minister for Maritime Affairs Luhut Pandjaitan said that for the next two to four years, the government will raise the TNI budget up to Rp200 trillion.

Indonesia registers USD284 million in defence exports | Jane's 360 IHS Janes 27th Nov 2018
The Indonesian Ministry of Defence (MoD) has pointed to a list of recent military exports as evidence of growing defence industrial capability within the country.

India, Indonesia launch their maiden naval exercise The Economic Times 13th Nov 2018
The first bilateral naval exercise named “Samudra Shakti” between the Indian and the Indonesian Navies was inaugurated on Tuesday in Surabaya, Indonesia giving further momentum to bilateral strategic partnership.

Economics

Govt Targeting to Release DNI Revision Rule in December Tempo 29th Nov 2018
Coordinating Minister for Economic Affairs Darmin Nasution said the revision of the Presidential Regulation on the types of businesses unlisted from the Negative Investment List (DNI) is being finalized. The government is targeting the rule signed next month.

BI to formulate seven policies to help economy in 2019 The Jakarta Post 28th Nov 2018
Bank Indonesia Governor Perry Warjoyo said on Tuesday that BI would help stabilize the economy amid global uncertainty by introducing seven main policies in 2019.

BI revises down inflation rate projection to 3.2 percent The Jakarta Post 12th Nov 2018
Bank Indonesia has revised down its inflation rate projection to 3.2 percent year-on-year (yoy) from its initial projection of 3.4 percent this year, after studying the latest inflation figures.

Energy

Indonesia Focuses to Expand Palm Oil Market outside Europe Tempo 29th Nov 2018
The Indonesian Trade Ministry focuses on developing several new export markets for palm oil products and its derivatives, given the negative sentiment that still continues from one of the main markets, the European Union.

Govt wants to generate 1 GW of rooftop solar power in 3 years The Jakatar Post 29th Nov 2018
The Energy and Mineral Resources Ministry’s renewable energy director general, Rida Mulyana, said on Wednesday that the government expected rooftop photovoltaic solar panels to produce 1 gigawatt (GW) of electricity nationwide within three years.

Indonesia Struggles to Meet Renewable Energy Target VOA 29th Nov 2018
Indonesia says it is unlikely to meet renewable energy targets it set after the Paris climate agreement, causing critics to call for changes in government policy.

Indonesian govt to refund Pertamina up to $1.3 bln for fuel sales... Reuters 29th Nov 2018
Indonesia’s government will compensate state energy firm Pertamina up to $1.3 billion for fuel sales costs in 2017 in addition to subsidies, for keeping domestic prices steady, a senior Pertamina official said on Wednesday.

Pertamina allocates US$5.5bn for capex in 2019 The Jakatar Post 28th Nov 2018
State energy holding company Pertamina has allocated US$5.5 billion for its capital expenditure (capex) in 2019, 37.5 percent higher than this year’s capex of $4 billion.

PLN admits electricity still too expensive for industry The Jakatar Post 28th Nov 2018
State-owned electricity company PLN has expressed its commitment to lowering the price of electricity for industry, as it is still considered too expensive.

PTT signs LNG contract with Tri-Gen Bangkok Post 27th Nov 2018
PTT Plc, the national oil and gas conglomerate, has signed a contract with Thai gas trader Tri-Gen Solution Co to distribute liquefied natural gas (LNG) for use in industrial factories.

Government to reduce fuel, gas use for electricity The Jakatar Post 23rd Nov 2018
The government is reducing the use of fuel and gas for electricity, a policy that is stipulated in a revision of the Electricity Procurement Plan (RUPTL) from 2019 to 2028.

Indonesia, Germany commemorate 25 years cooperation in renewable energy Antara News 21st Nov 2018
The Indonesian and German governments commemorate 25 years of cooperation in renewable energy through the 2018 Indonesian-German Renewable Energy Day (RE Day) Forum.

Indonesia's Energy Subsidy Spending Far Above Target in 2018 Indonesia Investment 19th Nov 2018
Ahead of the legislative and presidential elections (scheduled for April 2019) the Indonesian government is unwilling to impose impopular measures. One of the side-effects is that subsidy spending has gone beyond the target that was set in the 2018 State Budget.

Indonesia boosts domestic palm oil consumption as currency pressures mount Borneo Post 18th Nov 2018
Regulations mandating the use of palm oil in diesel fuel could help ease Indonesia’s dependence on energy imports and stabilise the local currency, while improving prospects for local palm oil producers.

PLN issues list of qualified clean energy developers The Jakatar Post 16th Nov 2018
State electricity company PLN has reportedly issued the list of qualified renewable energy developers that PLN will choose from as operators of new projects.

PLN signs power purchase deal for hydropower plant in Jambi The Jakatar Post 16th Nov 2018
State electricity firm PLN inked on Thursday an agreement to purchase electricity from the 350-megawatt (MW) Merangin hydro power plant in Jambi, set to operate in 2025.

Auction for early stage geothermal development areas in West Sumatra, Indonesia Think GeoEnergy 14th Nov 2018
Indonesia's Ministry of Energy and Mineral Resources through EBTKE is launching an auction for geothermal preliminary and exploration survey areas (WPSPE) in Bonjol, Pasaman Regency in West Sumatra Province.

Indonesia eyes looser foreign investment caps for geothermal energy Asian Power 28th Nov 2018
FDI is now expected to reach up to 100% in 54 sectors. Indonesia plans to loosen foreign direct investment (FDI) restrictions, with FDI now being able to reach up to 100% in 54 sectors. Reports from Mondaq said there will be no change in respect to ownership (67%) of geothermal power generation of up to 10MW. Ownership limits were set for geothermal operating and maintenance services (90%), power generation beyond 10MW (95% for general, and 100% for PPP during the concession period). The cap was also adjusted for geothermal drilling services (95%), geothermal surveying services (95%), and testing and analysis of electrical installation of high or extra-high voltage electrical power generating and utility installation (49%). “In some sectors, such as power generation, this is not a huge shift as these dispensations already existed,” Mondaq said. “However, it indicates an overall change of stance that sends a positive message to the market, which will in the long run make projects more bankable.”

Financial Services

P2P lending transactions total Rp 13.8 trillion in first three quarters The Jakarta Post 28th Nov 2018
According to Financial Services Authority (OJK) data, transactions through peer to peer (P2P) lending totaled Rp 13.8 trillion (US$951 million) in the first three quarters of 2018, with the non-performing loan (NPL) rate recorded at 1.2 percent.

No need for customers of Indonesia's illegal lenders to repay... Reuters 27th Nov 2018
Customers who borrow funds through Indonesia’s illegal financial technology lenders do not need to repay their loans, Deputy Communications Minister Samuel Pengerapan said on Tuesday. Indonesia is battling a wave of unlicensed “fintech” lenders who avoid registering with authorities and often employ aggressive debt collection practices.

Indonesia to consider more easing of liquidity rules in 2019... Reuters 27th Nov 2018
Bank Indonesia (BI) will review whether to further relax liquidity rules for the banking industry next year to compensate for its interest rate hikes, the governor said on Tuesday.

OJK issues new regulation to improve customer protection in the financial services sector www.hoganlovells.com 15th Nov 2018
Through its recently-issued Regulation No. 18/POJK.07/2018 ("POJK 18/2018"), the Indonesian Financial Services Authority (the "OJK") now requires financial service companies (pelaku usaha jasa keuangan or "PUJKs") to establish customer complaint handling units and procedures setting out in detail how customer complaints will be handled. Issued on 10 September 2018, POJK 18/2018 will come into force on 10 March 2019 (save in respect of private pawnshops, where it will apply as of 1 July 2020).

Food & Agriculture

Indonesia's coffee outputs to touch 650,000 tons this year Xinhua 27th Nov 2018
Production of coffee in Indonesia is forecast to reach between 630,000 tons to 650,000 tons by the year end, the Indonesian coffee exporters association said on Tuesday.

Indonesia launches pangasius brand to target Middle East Undercurrent News 14th Nov 2018
Indonesia has launched a pangasius brand with which it aims to capitalize on growing demand for the farmed fish in Middle Eastern markets, Amalia Maulana, brand consultant on the project, told Undercurrent News.

Indonesia, Malaysia palm oil stocks seen rising above 8 mil T by year-end — analyst The Edge Markets 14th Nov 2018
Palm oil inventories in Indonesia and Malaysia are expected to climb above 8 million tonnes by year-end on the back of higher production and disappointing demand, an industry analyst said on Wednesday.

Sustainable fisheries: A legacy to future generations The Jakarta Post 14th Nov 2018
The life of billions of people in the world depends on fisheries. About 88 percent global fish production is utilized for human consumption, according to 2016 data from the Food and Agriculture Organization (FAO). The world also relies on the fisheries industry for 120 million jobs.

Health & Life Sciences

No new polio cases, but Indonesia still at risk The Jakarta Post 29th Nov 2018
Recent reports of a poliomyelitis (polio) outbreak in neighboring Papua New Guinea (PNG) have raised concerns about the risk of the poliovirus spreading to Indonesia.

Stunting stunts Indonesia’s demographic dividend The Jakarta Post 27th Nov 2018
According to the Health Ministry, the prevalence of stunted children rose from 35.6 percent in 2010 to 37.2 percent in 2013.

ICT

Indonesia's digital economy to dominate Southeast Asia by 2025 The Jakarta Post 28th Nov 2018
A new study has found that Indonesia’s digital economy is poised to become the largest in Southeast Asia as its market value triples to US$100 billion by 2025 from $27 billion in 2018, promising more jobs and more consumer choices for an emerging tech-savvy generation.

Indonesia's new 'heresy app' draws fire Rappler 27th Nov 2018
A new Indonesian government app that lets the public report suspected cases of religious heresy is drawing fire as rights groups warn it could aggravate persecution of minorities in the world's biggest Muslim-majority nation.

Infrastructure

Transport Minister Guarantees LRT Project to Finish as Targeted Tempo 27th Nov 2018
The Minister of Transportation Budi Karya Sumadi confirmed that the construction of the Greater Jakarta light rapid transit (LRT) in the Jakarta-Cikampek lane and Jakarta-Bandung fast train will be finished according to the schedule at the end of 2019.

Indonesia's Lion Air to meet Boeing next week to discuss MAX series orders Channel News Asia 22nd Nov 2018
Indonesia's Lion Air plans to meet Boeing Co on Nov 30 to review the airline's orders for Boeing 737 MAX series planes in the period until 2035, Lion Air's director of safety and security Daniel Putut said on Thursday (Nov 22).

Belt and Road investment under fire in Indonesia’s presidential elections East Asia Forum 20th Nov 2018
As recently as 22 October 2018, Indonesia’s envoy for the BRI and Coordinating Minister for Maritime Affairs Luhut Panjaitan visited Beijing to discuss how the BRI can help facilitate Jokowi’s infrastructure vision. That same day, Prabowo’s brother and his campaign’s communications director Hashim Djojohadikusumo announced in a press conference that Prabowo will review existing BRI projects in Indonesia if he wins the election.

Government tells Go-Jek, Grab to settle problems with drivers The Jakarta Post 19th Nov 2018
Transportation Minister Budi Karya Sumadi has told ride-hailing apps Go-Jek and Grab to immediately settle issues with their drivers, who have held demonstrations to demand that their employers fulfill commitments. Members of the National Ride-Hailing App Drivers Alliance (Aliando) held a demonstration last week demanding the operators fulfill their promises, including to end drivers’ suspension, to provide training for the drivers and to eliminate income taxes. Budi said the ministry would try to act as a mediator to find a solution.

Manufacturing

Govt Remains Focused on Reinforcing Industrialization Tempo 25th Nov 2018
The government will remain focused on accelerating the country`s industrialization as it will bring multiplier effects to national economy.

Indonesia's motorcycle sales up 8.55 pct in first 10 months - Xinhua | English.news.cn Xinhua 14th Nov 2018
Sales of motorcycles, a barometer of purchasing power of middle-income group, from January to October edged up 8.55 percent to 5.33 million units year over year, according to data released on Wednesday.

Travel & Tourism

Solo-Ngawi Toll Road Eases Access to Many Tourism Sites Tempo 29th Nov 2018
State-owned toll operator Jasa Marga believed Solo-Ngawi toll road would create new connectivities as the solution of transportation issues.

Airport Tax Hike to Valid per First Dec. 2018 Tempo 28th Nov 2018
Six airports under the management of state-owned airport operator PT Angkasa Pura II (AP II) would increase the passenger service charge (PSC) tax per December 1, 2018, with a maximum of 35 percent hike.

Indonesia gives first report on deadly Lion Air crash on Wednesday Reuters 27th Nov 2018
Indonesian investigators will deliver their first report into the Lion Air crash on Wednesday, a month after the brand-new Boeing 737 crashed into the sea, killing all 189 on board in the country’s second-worst air disaster.

A new Bali on Indonesia’s eastern frontier? The remote Kei Islands see potential in tourism Channel NewsAsia 27th Nov 2018
Where Bali has exploded into one of the world’s best known holiday escapes, Kei’s location - closer to Darwin in Australia than Jakarta - has left it in a long shadow. From a state of seclusion adrift in the Banda Sea, the islands’ magic has been left untapped.

Indonesia's Merpati Airlines hopes to resume operations in 2019 Nikkei Asian Review 13th Nov 2018
Indonesia's state-owned Merpati Nusantara Airlines, which stopped flying in 2014 due to financial problems, hopes to resume operations next year, the company's president said Monday, revealing that the airline has received a promise of financial backing from a domestic investor.

From Regional Taxes to Water Policy, Hoteliers Face Obstacles in Doing Business in Indonesia Jakarta Globe 12th Nov 2018
Hoteliers have called on the government to speed up deregulation and revise laws and regulations that currently hamper competitiveness in Indonesia's tourism and hospitality industries.